Apple posts first drop in iPhone sales

Apple Inc. posted its first-ever decline in iPhone sales and first revenue drop in more than a decade as the technology giant struggles with an increasingly saturated market.

The company’s sales dropped by more than a quarter in China, its most important market after the United States, and it also forecast another disappointing quarter for global revenues, Reuters reports.

Its shares fell about 8 percent on Tuesday, dropping below US$100 for the first time since February.

A hike in Apple’s share buyback and dividend as well as bumper revenue from services failed to mollify investors.

Apple said it sold 51.2 million iPhones in its second fiscal quarter, down from 61.2 million in the same quarter a year ago but above analysts’ estimates of about 50 million devices.

Apple was hard pressed to top sales from the year-ago quarter, which was boosted by the recent launch of a new generation of iPhones, chief financial officer Luca Maestri told Reuters in an interview.

The phones featured larger screen sizes and sparked historic sales.

“The iPhone 6 is an anomaly, and so it creates a very difficult comparison for us,” Maestri said.

While Apple executives had predicted iPhone sales would decline this quarter, they must reassure investors that the drop represents a momentary roadblock, rather than a permanent shift for the product that fueled its meteoric rise.

After years of blockbuster sales, many investors fear the iPhone has reached saturation, spelling the end for Apple’s exponential growth.

The company has yet to present another device that can drive sales on that order, though last year it released the Apple Watch, its first new product without legendary co-founder Steve Jobs at the helm.

“Apple is going to be put in a position, in a defensive position of how they show growth, and this is an area that Apple has not had to do for the last few years,” said Patrick Moorhead, an analyst at Moor Insights & Strategy.

Earnings of US$1.90 per share fell short of the average analyst estimate of US$2 per share, according to Thomson Reuters I/B/E/S. Revenue of US$50.56 billion missed expectations of US$51.97 billion.

Apple forecast third-quarter revenue of US$41 billion to US$43 billion, short of the Wall Street consensus of US$47.3 billion.

It said it was raising its capital return program by US$50 billion through a US$35 billion increase in its share buyback authorization and a 10 percent rise in the quarterly dividend.

In March, Apple released the iPhone SE, a smaller, four-inch-screen phone featuring much of the company’s latest technology.

Although sales of the phone were not captured in the second quarter, the device is off to a strong start, particularly in emerging markets, Maestri said.

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